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What is BREXIT in South Africa Economy?

Brexit is just a shorthand way of
referring to the British exit from the EU. It is a word that owes something to
the term “Grexit”, which has been used for several years to refer to the
possibility that Greece might leave the Eurozone and now has been adopted and
will probably end up in Webster's dictionary.

The impact of one of the EU’s biggest and
richest economy leaving the EU is momentous and its repercussions are being
felt by markets across the world, apart from the direct political and economic
fallouts in the UK and inside the EU.

So what does this mean to us in South
Africa and what impact will this have on our struggling economy.

Well, for once we cannot blame
politicians, bankers, foreigners, bureaucrats and even political correctness,
but, can we blame Brexit?

Resignation and new Prime Minister

So the relationship between these two
have been frosty to say the least which started when in 2014 Zuma was told he
could only meet deputy Prime Minister Clegg as Cameron was too busy and then
prior to that in 2011, when President Zuma accused Britain and America of
attempting "regime change" during the uprising against Colonel
Gaddafi in Libya.

Whichever way we look at it this can only
improve, firstly because we need these relationships and secondly we need
investors and allies to prevent us from being downgraded even further by the
Moody’s of the world. A perfect time to
mend relationships with a new Prime Minister and elections looming in South
Africa and the imminent departure and new President at the next General
elections in South Africa.

With the “The Article 50 process being a
divorce: who gets the house, who gets the kids, who gets the bank
accounts," as senior EU officials have said, referring to priorities such
as trade, settling the EU budget and the status of Britons living in other EU
states and of EU citizens in Britain - several million people in total. “We
will need to find alternative countries and continents to import from and
export to”. The time is right for South
Africa to flex whatever influence it has now, while the divorce is happening.

Remember, new trade barriers would hurt
both sides' economies. However, a new trade would benefit all. But the EU fears
of a political "domino effect" of other countries voting to quit the
bloc would cost more long-term. But
would it for the Brics bloc and other countries? That is the question.

So the big question is: WHERE DOES THE EU GO FROM HERE?

The EU needs quickly to fill a
7-billion-euro hole in its 145-billion-euro annual budget, which is currently
fixed out to 2020, as it loses Britain's contributions while saving on what
Britons receive from EU accounts. So where will that money come from? The USA unlikely, Australasia – I doubt it –
That leaves Africa!

We already see that the week of 13th
July that President Zuma signed accords for higher education, cultural
cooperation and development cooperation with President Hollande from France.
Coincidence, I think not; because Britain’s decision to quit the European Union
would not hurt South Africa’s ties with the world’s largest trading bloc. –
From the horse’s mouth.

With the Southern African economic bloc
seeking $2.7billion for drought relief, opportunities are springing up for
those who see the ties and investment opportunities within the EU environment,
staring them in the face – is this a case of quid pro quo?

SO WHAT CHANGES?

A lot, unless the EU respond quickly.

The EU should put its excellent and
largely untapped credit to use. Leaders would be acting irresponsibly if they
failed to employ the EU’s borrowing capacity when its very existence is at
stake.

Make the deals, secure the loans and open
the trade with new partners.

We see Kenya, taking strain because of
the Pound exchange
rate being poorer than when they
negotiated their payments in pounds for exports; this is where new negotiations
should be struck immediately to secure the products and service but at the
correct exchange rate. It’s the future
that needs attention.

So Africa seems a
likely candidate for some exciting new ventures and with Theresa May as the new
Prime Minister her support for Africa starts with her shoes….

Photo Credit: Christopher Furlong/GETTY
Images.

About
the author:Chris Green - Financial Entrepreneur http://coronation.com/global.
A forerunner with Mortgage Origination in South Africa. Established the first
mortgage independent company in the UAE - Middle East. Managed lead generation
in the Money transfer industry internationally. Studied Marine Radio, IT and
Finance. Has expertise in IT technology background consulting in Database
Management and Software Design. Introduced the first artificial intelligence
testing system for computer programmers into South Africa. Has presented
various papers and products in Dubai, New York, Boston, London, Dublin, Milan,
Turin and Paris on subjects ranging from Darkroom Operations for IT to Creating
Finance modules for Property Letting. Currently an avid blogger, gatherer of
information and loves politics, finance and the future. His hobbies include
making grappa, being a sous chef (foodie) to his chef wife and reads everything
he can.